Lexpert Magazine

LEXPERT MAGAZINE | JANUARY 2013 35 play by Alimentation Couche-Tard in its $2.7-billion acquisition of Norway's Statoil Fuel & Retail unit, CGI Group's $3.1-bil- lion purchase of UK-based Logica PLC, and Gaz Metro's acquisition of Central Vermont Public Service Corporation. Quebec also provided the country with one of its most interesting hostile bids, as Cominar REIT took Canmarc REIT in an $838.2-million contested transaction, and one of its most ... entertaining securities decisions, as Resolute Forest Products man- aged to buy Fibrek Inc. — at $0.40 cents a share less than the competing white knight offer. As the year drew to a close, Quebec gave Corporate Canada another example of what lengths activist shareholders would go to, as Invesco Canada Ltd., aer seeing Lowe's Companies Inc.'s bid for the Que- bec-based retailer wither, decided to oust Rona Inc.'s board on its own. As the Cominar deal showcases, 2012 was also a year of the REITs. As Blakes partner William Fung points out, "e year was punctuated with several notable M&A REIT deals." Among them Dundee REIT buying Whiterock REIT for $608 million and dropping $1.26 billion on the iconic Scotia Plaza tower, as well as the $2-bil- lion privatization of TransGlobe Apart- ment REIT by PD Kanco LP and Starlight Investments Ltd. Good news for REIT lovers going forward: Fung predicts 2013 "will be just as active for REITs/REOCs as 2012, given the expectation that interest rates will remain low." e REIT deals were the domestic piece of the story, and the Maple/TMX was as patriotic a deal as one could get — but almost everything else of note involved for- eign players. "e globalization of deals in Canada has become the new normal, with foreign buyers continuing to snap up Cana- dian companies and US activist investors continuing to shake things up in Canadian boardrooms," says Hong. "Purely domestic deals now stand out, like foreign purchases did years ago." Finally, 2012 was the year of back stories — the year of deals that started last year, last cycle, or last decade. Maple's acquisition of TMX had a gestation period longer than an elephant — but that was nothing com- pared to the length of time that Rio Tinto's been stalking Ivanhoe. e buyout of Q9 Networks was effectively a wrap-up of the 2008 would-be leveraged buyout of BCE; Glencore's Viterra acquisitions unfolded in the context of a global Glencore-Xstrata plc merger dreamed of since 2006 and capital- ized on the Agrium-CF Industries "fertil- izer wars" of 2009. e Resolute purchase of Fibrek is a repatriation of assets that used to be part of Abitibi-Bowater — Resolute's former name. Plus ça change, plus c'est la même chose. Again. 1 Deal of the Year. Maple/TMX: MAPLE GROUP ACQUISITIONS CORP. TAKES TMX, CDS AND ALPHA. TIMELINE Deal with London Stock Exchange announced on February 2, 2011; Maple bid announced on May 25, 2011; last regulatory hurdles cleared by July 11, 2012; officially closed September 14, 2012. VALUE $3.8 billion. Here's the deal that captured the headlines of Canadian and global business pages throughout 2011 as the poster child for the tension between the globalization and re- domestication of capital markets, and held them through more than half of 2012 as the poster child for Canadian regulatory deal risk. It permanently changed the nature – and perhaps future strategic direction – of Canada's capital markets, and transformed the TMX into a vertically integrated exchange and clearing group. Perhaps just as significantly, it made Can- ada's largest banks, heiest pension funds – with a massive insurer and Canada's largest financial co-operative group thrown in, just to make life extra-interesting – pull consis- tently in one direction, and maintain their 13-member club in the face of considerable regulatory hurdles. (Not to mention the constant commentary from the Street that the club was fracturing and in imminent danger of falling apart.) Well. In what was indeed a "Miracle on Bay Street," they did not fall apart, they turned a hostile deal friendly, they sold the story to the shareholders, they brought four securities commissions and a concerned Competition Bureau onside. And they closed. "It is probably one of the most impor- tant deals in Canada in the last decade," says Torys' Sharon Geraghty, who led the TMX-side Torys team, which included the magic touch of long-time senior counsel for TMX Richard Balfour. For Torys and its client the TMX, the deal started as a run-of- the-mill – not! – proposed merger of equals between the TMX and the LSE. "at was challenging enough," says Geraghty. en came the Maple bid. e infamous undis- closed interested third party. A proxy fight. "If this deal was a law school exam ques- tion, you'd be rolling your eyes at it," Ger- aghty says. "And then they had a proxy fight — sure, like that would happen. And then you had two other major acquisitions (Alpha and CDS) happening at the same time — sure, that's realistic. If you hadn't been in it, you would not have believed a deal could have so many facets." Fortunately for all concerned, TMX gen- eral counsel Sharon Pel was an experienced M&A lawyer herself — and one with a sense of humour to boot. "When some hor- rible new thing came up, she'd just smile and say, 'Well, we haven't had one of those yet,'" Geraghty recalls. e other side wasn't laughing quite as much. If the deal was tense for the TMX, it was doubly – thirteenly, actually – tense for Maple. "It was tense through the whole piece," says Vincent Mercier, the Davies partner who led the bank-side legal team. "Even post support agreement, we had to work for it." Of course, pre support agreement, par- ticularly when the TMX was still engaged to the LSE and not allowed to talk to Maple at all, they had to work for it even harder, says McCarthy Tétrault LLP's Graham Gow, who led the pension-fund-side Maple legal team. e teams prepared their first bid documentation virtually in the dark (narrowly avoiding launching an illegal takeover bid in the US, among other things) and struggled with questions from the reg- ulators, who wanted to know exactly what a Maple-owned TMX (plus Alpha, plus CDS) would look like. Necessity being the mother of all inven- tion, to stay onside with US securities laws, the Maple-side lawyers developed a brand new two-step integrated transaction struc- ture that involved a partial bid for cash for 70 per cent of the TMX shares in the first TOP 10 DEALS 2012

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